Advertising on Social Networking Sites

I blogged on this previously. Purely because I was intrigued.

Today, I came across this quote from Martin Sorrell that goes part way to explaining what is going on here:

“Social networking is really recommendation between people about the things that they are interested in and they like… this has stimulated people’s attention in terms of the importance of PR. The people who are going on these sites didn’t want to be monetised, they didn’t want to be advertised to, so again editorial communication is so powerful, they would rather be communities that can exchange views that are untarnished.”

So what is being said here is that Social Networking sites are a mechanism for end users to provide each other with recommendations. We shouldn't underestimate this. There was a presentation at NRF (National Retail Federation) that reinforced this point. According to WSL Strategic Research, 74% of shoppers trusted the recommendations of friends or relatives. Furthermore, 40% of shoppers trusted reviews written by people who had used the product. This compares to 22% of shoppers who trusted the sales person in the store. But thank your lucky stars you are not a celebrity, only 10% of shoppers trusted their recommendations!

In similar research, Immediate Future found that 62% of shoppers trusted and used online reviews from fellow shoppers.

So, why does all this matter? Well, as social networking sites are increasing dramatically, it would appear that traditional online advertising does NOT work. If you don't believe me, take a look at these estimates from Technology Review.

Yet, ironically, 34% of bloggers admit to writing about products and brands in their blogs (according to the same report). And we know that shoppers behaviour is influenced by these views. Interesting.

The Immediate Future report on top brands in social media makes interesting reading.